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Current Topic: Telecom Industry

Deals Within Telecom Deals
Topic: Telecom Industry 2:07 pm EDT, Aug 25, 2002

An article about the sneaky financial dealings of the telecom industry. Time Warner Telecom, Sonus, Qwest, Williams, Winstar, Global Crossing, Corvis, Tellium, Lucent, Sycamore, WorldCom, Alteon, Nortel, and others.

... The fact that companies and their executives profited from investments in fledgling suppliers may help explain why there was such a gross misallocation of capital in the sector, and why networks that cost billions to build fetch far less in bankruptcy auctions.

This article implies a problem that is much more broad then likely existed. There were a lot of these sort of relationships in the industry, and not just between big telecoms and small equipment companies, but also between small telecoms and big equipment companies. There are many reasons for getting involved in a deal like this. Telecoms want cheaper gear and good support for it. Equipment dealers want environments that push the technical limits of their gear and/or need large customers who validate their offerings in the marketplace. Throwing stock into the deal is little different then lowering a price. If the equipment didn't work, or wasn't used, or wasn't really bought, then thats obviously a problem, but the overall value of telecom networks in the current environment has to do with sellers pressured by debt and an overcapacity in infrastructure rather then an inflation of the value of *new hardware.*

Extent of network capacity in most cases was based on demand estimates made by investment firms. Most people were not building capacity just to buy equipment. Its not impossible that this occured, but most of the industry is not guilty of this.

Deals Within Telecom Deals

The Economist, the Internet, Telecom and the Dow
Topic: Telecom Industry 11:40 pm EDT, Aug 18, 2002

" Even the "high speed broadband" offerings are providing only a small fraction of what is technologically possible and its asymmetricity is modeled after the television network, not the peer connectivity of the Internet. The failure to understand what the Internet really is deprives us of economic opportunity at a time when it is most vital. Giving a dead industry an exemption from antitrust so it can keep the future at bay is the way to maximize the damage to the economy. It is a tragic misunderstanding with real and immediate consequences. "

An interesting commentary on the death of telecom. Thoughts JLM?

The Economist, the Internet, Telecom and the Dow - High-speed Net may get cheaper -- and slower - August 17, 2002
Topic: Telecom Industry 1:30 pm EDT, Aug 18, 2002

"Cox Communications, the No. 5 cable provider, has been experimenting with a lower-priced service in Las Vegas, where subscribers can get a broadband connection for $26.95 per month.

The catch?

With download speeds of 200 to 250 kilobits per second, these "broadband lite" services are several times faster than a dial-up telephone connection, but perhaps only a third as fast as a typical cable or DSL connection. "

Lowering the monthly cost so that it looks just a little more expensive then Dialup may cause more people to get broadband. - High-speed Net may get cheaper -- and slower - August 17, 2002 Shake-Up Sought At WorldCom
Topic: Telecom Industry 4:19 pm EDT, Aug 17, 2002

Two WorldCom board members are urging other directors and creditors to fire chief executive John Sidgmore, saying his vision for bringing the telecommunications company out of bankruptcy is flawed and the company should instead be shopping itself to potential buyers.

Sources said the board members have met with creditors in recent weeks, seeking their support to replace Sidgmore. One source said a group of creditors and some directors had already interviewed a potential replacement for the chief executive. Shake-Up Sought At WorldCom

Qwest admits improper accounting - Tech News -
Topic: Telecom Industry 12:57 am EDT, Jul 29, 2002

Hey, no market crash, maybe we have seen the bottom...

Qwest admits improper accounting - Tech News -

BW Online | July 29, 2002 | Commentary: It's Not Time to Jettison AOL--Yet
Topic: Telecom Industry 1:57 pm EDT, Jul 26, 2002

"Subscribers pay nearly $6 billion a year in fees. Online advertising this year is expected to bring in $1.8 billion in revenues even after plunging 31% from last year. After marketing, product development, depreciation, and other expenses, operating income should still be about $1.5 billion from the U.S. If AOL were charged for, say, one-fourth of the corporation's total interest expense and corporate overhead--and even an extra $100 million if it joined the new bandwagon and expensed stock options--it would still make nearly $900 million this year in the U.S. before taxes. "

BW Online | July 29, 2002 | Commentary: It's Not Time to Jettison AOL--Yet

Michael Powell's telecom epiphany - Tech News -
Topic: Telecom Industry 1:53 pm EDT, Jul 26, 2002

"In short, what Powell most needs to do is to accelerate action on proposals pending at the FCC that would lessen regulation of the telecommunications industry, particularly ones that would free the former Bell companies from rules that discourage investment in new broadband networks. "

Conservative group tells FCC to take their hands off the RBOCs.

Michael Powell's telecom epiphany - Tech News -

BW Online | July 24, 2002 | Microsoft's Booster Shots for Broadband
Topic: Telecom Industry 12:50 pm EDT, Jul 25, 2002

"Now, after talking up and praying for speedy adoption of broadband seemingly for ages and getting no response, Microsoft (MSFT ) is trying a more direct approach. It's offering its content to providers of high-speed Internet access to spice up their offerings. The Colossus of Redmond is also building out Xbox Live, an online gaming network with supercool graphics and interactivity, to lure gamers into going broadband. Finally, it's striking more deals with Internet service providers, perhaps in an attempt to help them financially -- essentially subsidizing broadband access for consumers. "

I've been wondering why I haven't been seeing ads on TV for online gaming. Its about time. This article is very critical, but I think this is exactly the sort of move thats needed. Online gaming has taken off in Korea because of the lack of alternative social outlets for young people, but it has staggered in the U.S. because of the high end PCs required and because of the time investment required by most online games. If online games had a simpler, more arcade like quality, lots of tie-in with real world social groups, and low cost of entry, this could be exactly the juice that the telecom world needs.

BW Online | July 24, 2002 | Microsoft's Booster Shots for Broadband

Regional Bell Giants No Longer Invulnerable
Topic: Telecom Industry 12:20 pm EDT, Jul 24, 2002

Shortly after BellSouth, the nation's No. 3 local phone company, sent its stock plunging yesterday by saying it would fail to meet its financial targets for 2002, one analyst released a report titled, "It's Official -- There Is No Place to Hide."

In some ways, the pronouncement was as startling as it was apt. While the carriers fought each other and CLECs withered, RBOCs could sit back with their near-monopolies and reap growth, profits and the adulation of investors.

Or so the story went.

The Bells' problems keep mounting.

Asked about growth prospects, a Verizon rep said, "We see long-term growth on the wireless side, and also a great opportunity to offer wireless services to our enterprise customers."

He made no mention of plain old telephone service.

Nothing about POTS, but also nothing about profits. Growth is not cheap in these markets, and the new customers remaining to be won are not particularly valuable.

BellSouth shares lost 18% yesterday on news that net income was down 67% for the quarter. That's a four year low. If you thought the RBOCs' cash flow immunized them against the telecom collapse, think again.

Regional Bell Giants No Longer Invulnerable

BW Online | July 23, 2002 | The Bells: Apocalypse Now -- or Later?
Topic: Telecom Industry 12:15 pm EDT, Jul 24, 2002

"Googin has been warning about an implosion in the telecom sector since September, 2000, a year before Wall Street became aware of the problem's severity. Now she cautions that the crisis isn't limited to telecom upstarts. The problem is the Baby Bells, she says. "

Two camps on the grim telecom future.

BW Online | July 23, 2002 | The Bells: Apocalypse Now -- or Later?

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